Daily Market Commentary 7th May 2024

The weaker than expected Non-Farm Payroll number released Friday boosted market confidence that interest rate cuts would come sooner rather than later. The weaker than expected employment data is what the Federal Reserve is looking for and triggered speculation that rates cuts may be on the way, boosting equities and bond yields were softer. European Services and Composite PMI data also came in stronger than expected. German and EU data showed stronger signs of expansion, although Manufacturing remains the real drag on measures of economic activity. The EUR stabilised above 1.0750, while the GBP holds around 1.2550.

The softer reserve allowed the AUD to consolidate above 0.6600, while the NZD looks to regain 0.6000. Local markets are firmly focused on the RBA and their latest interest rate decision. The Central Bank is expected to hold rates unchanged, but the narrative will be crucial. If the Bank adopts a more ‘dovish’ tone, we could see a softer AUD, but strong language surrounding ‘higher for longer’ will reinforce the recent rally.